China National Travel Service (601888): Hainan gradually builds a free trade port and the island ‘s tax exemption policy is gradually and continuously optimized

China National Travel Service (601888): Hainan gradually builds a free trade port and the island ‘s tax exemption policy is gradually and continuously optimized

Recently, from the central to the local scale, references to the Hainan Free Trade Port have appeared many times. Hainan’s official statement that 2020 is the beginning of the construction of the Hainan Free Trade Port, has aroused market attention.

In the short to medium term, the policy will be relaxed to zero tariffs and revenue reductions. Outlying island tax exemptions will still have a price advantage, and the policy end will benefit from the construction of a free trade port. In the long term, China Exemption is expected to achieve profit continuity through procurement channels, membership and scale advantages.Grow and maintain the “Highly Recommended-A” rating.

  2020 is the beginning of the year, and gradually implement the free trade port policies and systems.

According to the “Guiding Opinions” plan of the State Council, major progress has been made in the construction of the Hainan Free Trade Zone in 2020. At the same time, the establishment of a free trade port policy and system has been initiated. Therefore, Hainan’s current work will focus on two aspects: First, to accelerate the construction of the Hainan Free Trade ZoneLay the foundation for the construction of a free trade port; the second is to study the steps and establish the Hainan Free Trade Port policy and institutional system in stages, with the focus on promoting the legislation of Hainan Free Trade Port Basic Regulations.

  Zero tariff is the goal of the next stage, and the island’s tax exemption still has advantages.

Hainan officials stated that they are expected to start exploring the construction of a free trade port in the second quarter of next year, and to benchmark the world ‘s highest level of openness. To achieve a major breakthrough in policies and institutional systems, the next phase will focus on zero tariffs and reductions.

The import circulation tax includes three major taxes: tariff, import substitution and consumption tax. Zero tariff is only reduced or exempted. Even under the zero tariff policy, the comprehensive tax burden is still large, and the tax-free channels still have prices.Advantage.

  The island’s tax exemption policy will continue to be liberalized, and the long-term benefits of the mid-term exemption will increase.

Outlying island tax exemptions are difficult to open to foreign countries in the short term. Existing domestic tax-exempt companies wanting to enter will face problems such as longer approval times, better points being replaced by China exemption, and weak procurement capabilities.

With the development of the free trade zone, the island’s tax exemption policy is expected to further break, especially the postal tax.

  If Hainan ‘s island-wide tax exemption is implemented in the future, it will greatly stimulate consumption. China ‘s exemption will overlap with the first-mover advantage of the Hainan ‘s tax-exempt market to form a powerful procurement channel and member group. In the future, China ‘s policies will be liberalized.Achieve a smooth transition in profits.

  Investment suggestion: We expect net profit attributable to mother to be 48-20 in 2019-2021.

0/51.

6/62.

0 ppm (assuming that Haiwai will begin consolidation in 2020), with an annual growth rate of 55% / 8% / 20% (excluding the impact of travel agency divisions, performance growth of 30% / 26% / 20%), the corresponding PE valuation is 36x / 34x / 28x.

Taking 佛山桑拿网 into account the expectation of Beijing and Shanghai’s in-store policies to be liberalized, and the increase in sea-exemption consolidation, the target price for 2020 is 40x, with a target price of 106 yuan, and the rating of “Highly Recommended-A” is maintained.